Tony Abbott is right. Julia Gillard and Wayne Swan have grossly misled the public on the cost of their abject surrender to the three big mining companies over the former resources super profits tax.
They claimed that almost halving the rate of the tax - from 40 per cent to an effective 22.5 per cent - and making various other concessions demanded by the companies would reduce tax collections by just $1.5 billion over...
Monday, July 12, 2010
Saturday, July 10, 2010
Why 600,000 out of work is a magic number
Who would have expected it? A year ago we thought we were headed for a severe recession and this week we learn the rate of unemployment is down to 5.1 per cent. Do you realise that's just a fraction above what economists - and the Gillard government - regard as full employment?
Huh? If 5 per cent of the labour force - 600,000 people - is still looking for work, how on earth can economists say we're at full employment?...
Wednesday, July 7, 2010
Green jobs just muddy the climate-change waters
A cartoon by Jon Kudelka shows Julia Gillard ticking off items on her to-do list: first, appease billionaires; second, appease xenophobes; third, appease climate sceptics. Too true ... although, actually, when she has finished appeasing those who live in fear of boat people her last bit of pre-election deck-clearing will be to appease those who regret the government's decision to walk away from its emissions trading scheme...
Monday, July 5, 2010
Economists help cause gutless government
I hope I'm wrong, but I fear the all-in fight over the resource super profits tax will in time be seen to have brought the era of micro-economic reform to an end. If so, the economics profession will bear its share of the blame.
You could argue (as I did on Saturday) that, though the compromise deal Julia Gillard came up with is far from perfect, it still represents a net increase in economic efficiency relative to the...
Saturday, July 3, 2010
Battle over tax leaves Labor with bloody nose
The deal Julia Gillard has done on the mining tax is bad for her government's reputation, bad for democracy and bad for the future of economic reform, but not too bad for the economy.
The immediate reaction of most parties will be relief. What was seen as a great threat has gone away.
The big miners will be quietly congratulating themselves on the extent of their victory, but leaving it to their friendly business commentators...
Wednesday, June 30, 2010
Tiny tax cut a blessing for battlers
Forgive me, but I'm tickled by the latest joke: the good thing about having a woman as prime minister is we don't have to pay her as much. Actually, the amount the prime minister gets paid is just one of the many things that won't be changed by Labor's leadership switch.
A new face, a new atmosphere, a new attitude towards the government for many people, but surprisingly little change in policy.
Take, for instance, the...
Monday, June 28, 2010
Gillard has little room for compromise on tax
Ending the fight over the resource super profits tax may be at the top of Julia Gillard's to-do list, but she has no scope to drop the tax and little scope to reduce it.
Surprisingly to some, the reason the new Prime Minister can't drop the tax is not because it would leave a hole in the budget. Arithmetically, the tax could be dropped without affecting the government's commitment (repeated by Gillard) to have the budget...
Saturday, June 26, 2010
Model way of conning us all
A new prime minister but the same old problem: the mining industry claims the resource super-profits tax would damage it and the economy, whereas the government claims it would be great for the industry and the economy.
And both sides have "independent modelling" to support their claims.
If that doesn't make you sceptical about the use of modelling in the political debate, it should. But if you need more, try this: the two...
Wednesday, June 23, 2010
Our media roasts old chestnuts
If a genie appeared from a bottle and offered me one wish, I'd choose to be a columnist on a major newspaper. So I guess you could say I love my job. But there are times when I feel compelled to warn people to be careful about what they read, hear and see in the media.
Many people assume the media give them a representative picture of what's going on in the world beyond their own experience. But this is a misunderstanding...
Monday, June 21, 2010
God give us better armed forces, but not yet
Kevin Rudd's chronic tendency to over-promise and under-deliver means the Australian Strategic Policy Institute's annual review of the defence budget is always an object lesson in how his long-suffering purse-string ministers manage to square the budget circle each year.
The fact that the Howard government was prepared to neglect many areas of spending that the Rudd government isn't - education and infrastructure, for...
Saturday, June 19, 2010
Population fall poses immense new challenges
Peter Costello used to say demography is destiny. Like many of the things he said, that's an exaggeration. But it is going to have a big effect on your future.
Demography is the study of human populations. In principle, it's quite separate from economics. But economists are likely to be saying a lot more about it - and boning up on it - because demographic change will have a big effect on the thing they care about most:...
Wednesday, June 16, 2010
Wanted: some belief in a leader
As I lay in bed one freezing morning lately I wished it would rain so I wouldn't have to get up and go jogging. But it's a free country - if I disliked the idea of going out into the cold so much, why didn't I just stay in bed? Because I knew if I wanted to be fit there was a small sacrifice involved. I also knew that when I make an effort I feel better than when I don't. All of us make similar decisions every day.
There's...
Monday, June 14, 2010
What would Jesus do about economic growth?
Should Christians support capitalism? According to a leading English layman, despite all its material benefits, capitalism as we know it contains moral flaws with serious social consequences.
I'm in no position to preach to Christians, but I'm happy to pass on the views of Dr Michael Schluter, founder of Britain's Relationships Foundation, which will be of interest to a wider audience (and can be found at www.jubilee-centre.org/resources.php?catID=1).
Schluter's...
Saturday, June 12, 2010
The economy's animal spirits
John Maynard Keynes first recognised it when seeking to explain why the Great Depression happened even though the economic theory of the time said it couldn't. But it's taken the global financial crisis to help us rediscover that truth: the main reason economies fluctuate as they do is the changing psychology of the people who compose the economy.
Keynes called this our "animal spirits", which is the title of a book by George...
Wednesday, June 9, 2010
NSW budget: Staying on target needs steady hands
So far, so good. A government on its last legs, with everything - and nothing - to lose, has delivered a responsible budget.
Of course, whether the good guys within the Keneally government can keep holding the line against crazy, panic-stricken decisions until election day is another matter.
The Treasurer, Eric Roozendaal, can - and does - boast a return to budget operating surplus two years earlier than expected, with...
At last a strategy that will ease the housing shortage
It has taken Australians a long time to twig that rapidly rising house prices aren't as good as they sound. For ages home owners happily imagined higher prices made them richer. But richer in what sense?
For a start, you can't get your hands on that wealth unless you're prepared to trade down to a smaller or cheaper place. You can borrow against it, but what's so great about that? You still have to pay interest - and pay...
Monday, June 7, 2010
How Keynes, not mining, saved us from recession
You never judge economists by whether they get their forecasts right. They rarely do. But they score points in my book if they're willing to work out why they got them wrong - and make the results public.
This is what Treasury's chief forecaster, Dr David Gruen, did in a speech to the Economic Society in Sydney on Friday.
I don't hold out much hope that such exercises will help produce better forecasts in future. But they...
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